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James Dinan is a graduate of University of Pennslyvania and received his MBA from Harvard Business School. He worked for investment bank Donaldson, Lufkin & Jenrette for two years until 1983. In 1985 he started working for Kellner, Dileo & Co. After a six year spell at Kellner Dileo, he left and opened his own investment house, York Capital Management, in 1991.

During the first quarter Dinan sold his entire stake in General Electric (NYSE:GE), Air Products (NYSE:APD), and Potash (NYSE:POT). He also reduced his bet on Citigroup (NYSE:C) by 31%. York Capital has made eight changes in its top 30 holdings according to its last 13F. York Capital was also engaged in several merger arbitrage plays. Genzyme was bought by the French pharmaceutical giant Sanofi Aventis (NYSE:SNY) for $74.0 in April. Also, Alcon (NYSE:ACL) was acquired by the Swiss pharmaceutical firm, Novartis (NYSE:NVS), during the quarter. Largest new additions to his top stocks were Dollar Thrifty (NYSE:DTG) and Beckman Coulter (NYSE:BEC). Dinan’s top 30 holdings as of March 31st returned -1.5% outperforming SPY by 1.4%.

Stock

Value (Thousands)

Activity (+/-)

Return Since March 31, 2011

Genzyme Corp (GENZ)

$683,257

0.1%

N/A

Dollar Thrifty Automotive (DTG)

$278,507

New

22.9%

Beckman Coulter Inc (BEC)

$258,534

7.3%

0.5%

Hertz Global Holdings Inc (NYSE:HTZ)

$247,845

0.7%

-5.4%

Fortune Brands Inc (FO)

$238,486

New

2.9%

Lyondellbasell Industries (NYSE:LYB)

$218,478

-0.1%

-2.0%

Ivanhoe Mines Ltd (IVN)

$201,998

0.3%

-18.0%

Big Lots Inc (NYSE:BIG)

$201,499

New

-25.8%

Grace W R & Co Del (NYSE:GRA)

$185,222

0.7%

14.8%

Tyco International Ltd Swtzlnd (NYSE:TYC)

$178,412

New

5.5%

Abovenet Inc (NYSE:ABVT)

$145,971

0.0%

11.8%

Sealed Air Corp New (NYSE:SEE)

$136,336

4.5%

-13.6%

Citigroup Inc (C)

$133,311

-0.3%

-15.6%

Alpha Natural Resources Inc (NYSE:ANR)

$132,876

0.6%

-19.1%

Mead Johnson Nutrition Co (NYSE:MJN)

$123,801

-0.2%

12.2%

Chemtura Corp (NYSE:CHMT)

$119,278

0.2%

3.6%

Walter Energy Inc (NYSE:WLT)

$118,675

-0.1%

-12.5%

Petsmart Inc (NASDAQ:PETM)

$104,739

10.4%

6.7%

Family Dollar Stores Inc (NYSE:FDO)

$100,689

New

-0.1%

United States Steel Corp (NYSE:X)

$94,524

-0.2%

-23.9%

Embraer S A (NYSE:ERJ)

$92,138

New

-7.3%

General Motors Co (NYSE:GM)

$87,291

0.0%

-8.8%

Radware Ltd (NASDAQ:RDWR)

$85,525

0.4%

-2.5%

N Y S E Euronext (NYSE:NYX)

$79,267

New

-0.7%

Ashland Inc New (NYSE:ASH)

$79,538

New

9.0%

Masco Corp (NYSE:MAS)

$76,585

New

-11.0%

Jpmorgan Chase & Co (NYSE:JPM)

$74,431

New

-12.3%

Sara Lee Corp (SLE)

$73,966

New

5.9%

Pride International Inc Del (NYSE:PDE)

$68,037

0.6%

-5.7%

Abercrombie & Fitch Co (NYSE:ANF)

$67,509

-0.3%

20.3%

Weighted Average

-1.5%

SPY

-2.9%

Dinan reported Dollar Thrifty Automotive (DTG) as his largest new position, adding more than 4 million shares to his portfolio. The stock performed very strongly, returning 22.9% since March and outperformed the SPY by a whopping 24.0%. Dollar Thrifty has a market cap of $2.4 billion and a P/E ratio of 20.53. Dollar Thrifty does not pay dividends. Dinan is the largest hedge fund holder of the stock, but not the only one. Paul Reeder and Edward Shapiro of Par Capital Management own a substantial amount of shares in Dollar Thrifty. Both Doug Silverman’s Senator Investment Group and Barry Rosenstein’s Jana Partners started new positions buying 1.9 million and 1.4 million shares respectively during the first quarter. Renaissance Technologies which is managed by Jim Simons upped its stake by 140% and now owns more than 1.3 million shares.

Dinan is also bullish on Beckman Coulter (BEC), manufacturer of biomedical testing instrument systems. Dinan’s last 13F filing shows that he increased his bet on Beckman Coulter by 700+%. The stock recently traded at its 52 week high of $83.31. Beckman Coulter has a P/E ratio of 29.13 and a dividend yield of 0.91%. BEC is up 0.4% since March, outperforming SPY by 3.3%. York is the largest hedge fund owner of the stock with more than 3 million shares as of March. Matthew Halbower of Pentwater Capital Management is also bullish on the stock and he increased his stake by 4.8% during the first quarter. Steve Cohen’s SAC Capital did not buy any shares but started a debt position in the company which was worth $79.5 million in March. Thomas Steyer’s Farallon Capital and Frank Brosens of Taconic Capital both initiated 700+ K share positions in Beckman Coulter during the first quarter.

Just like in Dollar Thrifty and Beckman Coulter, York Capital Management is the largest hedge fund owner in Hertz Global (HTZ). Dinan increased his stake in Hertz by 65% and now owns more than 15.8 millions shares. The stock has lost more than 5% since March and recently traded at $14.83. The firm has a market cap of $6.2 billion and does not pay dividends. Glenn Russell Dublin’s hedge fund Highbridge Capital Management initiated a new position in the firm and bought more than 9.3 million shares.

Fortune Brands (FO) is Dinan’s second largest new investment for the first quarter. Dinan bought 3.8 million shares which made him the second largest hedge fund owner of the stock. Fortune Brands recently traded at $63.00 and has a market cap of $9.7 billion. Fortune Brands has a P/E ratio of 19.64 and a dividend yield of 1.21%. The stock returned 2.6% since March and outperformed SPY by 0.3%. Bill Ackman’s Pershing Square has a stake of 16.6 million shares in Fortune Brands and it is the largest hedge fund in the stock.

Like Dinan, Kenneth Mario Garschina’s Mason Capital Management and Adam Weiss’ Scout Capital Management both initiated new positions in Fortune Brands. Craig Effron (Scoggin) increased his stake by 0.17% during the quarter and now owns 969K shares.

We like Dinan’s stock picks and believe that investors will be able to beat the S&P 500 index over the long term by imitating his top positions. They should pay special attention to merger arbitrage plays and don’t forget to short the acquirers when investing in these stocks.

Disclosure: I am long C.

Source: James Dinan's Favorite Stock Picks